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In 2006, AARP was one of the largest, most well known nonprofit organizations in the United States. Its membership base exceeded 38 million individuals, by far the largest nonprofit membership base in the country. In recent years, it had influenced major federal legislation on issues including Medicare, Social Security, and pension reform through a coordinated effort of professional lobbyists and grassroots volunteers numbering close to one million. In addition, AARP Services Inc, the organization's wholly owned, taxable (earned income activities) subsidiary, managed relationships with AARP-endorsed businesses that generated over $500 million in royalties from health insurance, life insurance, mutual funds, and other products--making it one of the largest social enterprises in the country. With activities in the commercial, charitable, and political arenas, AARP had adopted a truly cross-sector approach to achieving its mission to "enhance the quality of life for all as we age." Despite its size, influence, and visibility, AARP felt the public did not fully appreciate or understand the organization. In the face of growing public interest and media fascination with the application of business practices and market principles in the social sector--under the rubric of social entrepreneurship--AARP received relatively little attention from journalists, thought leaders, and academics for its enterprising approach. The organization also faced a public relations challenge over the fundamental principles of its cross-sector model. Left unchecked, AARP knew that such allegations, regardless of their validity, could undermine its ability to achieve its long-term goals. The organization also faced competitive challenges and the problem of increasing internal cooperation and synergy across the entire organization in order to improve its competitiveness and execute its social impact and member value agendas.

learning objective:

To understand the unique issues facing organizations that operate in multiple spheres--business, nonprofit, and legislative. To learn how to address these challenges and achieve broad social impact goals.

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Circus Oz was Australia's premier international circus, having performed in 26 countries on five continents. In early 2002, Circus Oz enjoyed its strongest financial position since its founding in 1977, making a profit and sitting on a surplus of AUD$1,169,313. Although in recent years the company had increased the percentage of revenue generated from the box office, more than 60% of its funding still came from the Australia Council, its largest government sponsor. Linda Mickleborough, general manager of Circus Oz, was pondering how to respond to a recent offer by the Australia Council to fund a new position, director of development, at Circus Oz. The Australia Council was strongly encouraging the circus to hire development professionals to expand its funding from corporate donors. As an enticement, the council offered to underwrite the cost of the position for two years. Mickleborough had found the ideal candidate. The decision, however, was still a difficult one. Circus Oz had relatively flat salaries, reflecting deeply held egalitarian and democratic values. These values were central to the company's creative process, culture, and aesthetic. The suggested salary of the development director position was more than two times the highest salary currently paid to any employee at Circus Oz. Such a large salary disparity might wreak havoc on the company's morale and culture.

learning objective:

To explore the relationship between culture and competitive advantage and the implications of human resources management policies on culture and organizational performance.

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Circus Oz was Australia's premier international circus. It was founded in 1977 on four principles: collective ownership and creation, gender equity, a uniquely Australian experience, and team-work. The A segment of the videocase mirrors the written case (SI-69) in exploring the Australia Council's offer to fund a development officer position for two years, largely as a way of increasing income from corporate sponsorships and reducing reliance on government support. The Australia Council had suggested a salary for this position that was considerably higher than even the highest Circus Oz salary. Hence, the organization's leadership was concerned about the impact that deviating from their relatively flat wage structure would have on the company's morale and culture. The videocase also contains footage of Circus Oz performances, providing a window on to the link between the organization's culture and its aesthetic. The B segment of the videocase covers the resolution of the dilemma around hiring the development director and the decision to hire the candidate, Paul McGill. In particular, it focuses on the shift in the conception of the position from "development director" to director of strategic partnerships and the implications of this for the relationship between Circus Oz and its corporate partners (rather than sponsors). The video showcases partnerships with consulting firm "Empower" and container shipping company "P&O Nedlloyd." Professor Jim Phills developed The Social Entrepreneurship Series to help students appreciate mechanisms of change and theories of action as well as challenges in initiating and sustaining meaningful change in social sectors.

learning objective:

To explore the relationship between culture and competitive advantage and the implications of human resource management policies on culture and organizational performance.

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When important social problems are not solved or social needs go unmet due to neglect or inaction in the private sector, even though the technological, financial, and human means exist to address these problems or needs, economists call this a "market failure." This videocase details the efforts of three "social entrepreneurs" who brought innovative ideas, used entrepreneurial skills, and leveraged market principles to "correct" these market failures. It also highlights one important difference between them and traditional entrepreneurs-they prioritized social impact over the wealth creation. By emphasizing social returns, these "social entrepreneurs" have been serving the needs of poor, disadvantaged, and neglected communities. The entrepreneurs showcased are: (1) Jim Fruchterman, Benetech, who created technology-based projects such as reading machines for the blind; (2) David Green, Project Impact, who developed an innovative approach to manufacturing low-cost, high-quality medical supplies to treat and prevent blindness and deafness in the developing world; (3) Victoria Hale, OneWorld Health, who worked to develop new medicines for infectious diseases that killed millions of people in the poorest parts of the world. The three discuss how they launched their organizations and how their alternative "business models" work. The videocase includes supplemental sections on the challenge of product distribution and their reflections on the experience of being a social entrepreneur.

learning objective:

Explore three leading social enterprises, the market failures they seek to address, and the impact they have on their target populations. Evaluate the similarities and differences between the three solutions and compare the mechanisms of action that contribute to their success. Help students understand the benefits and opportunities associated with addressing traditional problems via innovative, non-traditional solutions.

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In the most basic sense, a market failure occurs whenever the production or allocation of goods or services by a market is suboptimal. On one hand, this can mean that the output, price, or distribution of products is either inefficient in the sense that the overall level of economic value or social welfare could be increased. On the other hand, it can mean that the resulting allocation is inequitable or inconsistent with values of justice or fairness. From a public policy perspective, such failures are of concern because the public interest or overall social welfare is lower than it could be if the market were functioning more efficiently. Traditionally, societies have looked to government intervention to correct these market failures. Sometimes, charitable organizations got involved. However, private businesses were rarely called upon (or expected) to respond to breakdowns in efficient market operations by modifying their behaviors in a free-market system. However, a new class of actors has recently gained recognition. These individuals often found and manage organizations drawing on innovative ideas, using entrepreneurial skills, and leveraging market principles, but with one important difference from traditional entrepreneurs: they prioritize social impact over the creation of wealth. These "social entrepreneurs" have discovered and implemented new ways of creating social and environmental value by serving the needs of poor, disadvantaged, and neglected communities. Examines the insights, aspirations, and impact of three leading social entrepreneurs, their organizations, and their efforts to correct a diverse array of classical market failures.

learning objective:

To explore three leading social enterprises, the market failures they seek to address, and their impact on the target populations; to evaluate the similarities and differences among the three solutions and compare mechanisms of action that contribute to their success; and to discuss the benefits and opportunities associated with addressing traditional problems via innovative, nontraditional solutions.

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In response to the closure of California state psychiatric hospitals, Rubicon Programs was established in 1973 to provide social services for recently deinstitutionalized individuals suffering from mental illness. Located in Richmond, California, an area with great need and high unemployment, Rubicon quickly expanded to offer a wide range of programs and services addressing poverty and homelessness for people with barriers to employment. By 2003, Rubicon Programs had grown into a large nonprofit organization with an international reputation for its success as a social enterprise. Aside from its two core programs of Integrated Services and Rubicon Housing, Rubicon operated three revenue generating business units that employed clients of it social programs: Rubicon Landscaping, Rubicon Bakery, and Rubicon HomeCare Consortium. While the top management team agreed that Rubicon's individual units were successful, they wondered whether the social and economic value created by the whole was more than the sum of the parts. The videocase explores Rubicon's reflections and deliberations about to their corporate strategy. In addition, it focuses on a decision about how to deal with the struggling home healthcare division. SI-77v Rubicon Program's Corporate Strategy is part of The Social Entrepreneurship Series. Professor Jim Phills developed The Social Entrepreneurship Series to help students appreciate mechanisms of change and theories of action as well as challenges in initiating and sustaining meaningful change in social sectors. Other video cases in this series include SI-14v The Evolution of Interplast, SI-25v Innermotion on the Move, SI-69v Circus Oz, and SI-72v Social Entrepreneurs: Correcting Market Failures.

learning objective:

To explore the challenges of managing the multibusiness nonprofit social enterprise drawing on corporate strategy conceptual frameworks to analyze the interrelationships (especially costs and benefits) among distinct programs/divisions of a complex nonnprofit organization.

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A non-profit organization founded in 1990, Innermotion was a dance company that presented performances based on themes related to incest and childhood sexual abuse as well as therapeutic workshops for survivors of such abuse. The organization consisted of an all-volunteer troupe of childhood sexual abuse survivors, and its lone full-time employee, founder and artistic director Sharon Daugherty. Innermotion relied primarily on state and federal funding from sources intended to provide support services to victims of crime and domestic violence. Precipitated by the loss of a major grant and participation in an executive program on strategy, Daugherty felt pressured reexamine her focus and priorities. The videocase explores Innermotion's mission and strategy as well as the choices, tensions, and risks associated with the decision to narrow or broaden the organization's competitive scope. SI-25v Innermotion on the Move is part of The Social Entrepreneurship Series and is intended be used in conjunction with the text-based case SI-25 Innermotion. Professor Jim Phills developed The Social Entrepreneurship Series to help students appreciate mechanisms of change and theories of action as well as challenges in initiating and sustaining meaningful change in social sectors. Other video cases in this series include SI-14v The Evolution of Interplast, SI-69v Circus Oz, SI-72v Social Entrepreneurs: Correcting Market Failures, and SI-77v Rubicon Program's Corporate Strategy.

learning objective:

To explore issues of strategy and mission in the context of a small entreprenurial nonprofit. In particular, the the case provides and opportunity to apply the concept and technique of industry analysis in a setting in which there are two distintic industries of relevance (dance/performing arts and social/human services).

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Seattle's theatre industry had a rich, 38-year history of producing top-quality plays and musicals. In a typical year, the theatres collectively sold over 1 million tickets and pumped over $8 million into the local economy. Historically, the five major theatre companies--Seattle Repertory Theatre, A Contemporary Theatre, The Empty Space Theatre, Intiman Theatre, and Seattle Children's Theatre--each had a clearly defined mission statement and unique artistic focus. However, by the close of the 2001 season, the theatres' strategic and artistic identities had blurred as each company pursed growth. Some attributed theatregoers' and donors' waning interest and declining support to this homogenization in addition to the slumping U.S. economy. Others argued that there was too much capacity in the industry and that to survive, the stronger theatres had to expand their niches and even drive smaller, weaker players out of business. The vibrant Seattle theatre industry appeared to face monumental challenges to remain both critically acclaimed and financially sound.

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In early 2003, Reverend Doctor Dieter Kays, the CEO of Lutherwood-CODA, was reflecting on Luther Village, the Canadian nonprofit's bold, three-phase, 12-year, $75 million real estate project to develop a sprawling, high-end, 20-acre, 750-member retirement community in downtown Waterloo. With the first two phases of the project complete, Luther Village had accumulated $4.5 million of profit from construction. Phases I and II of Luther Village had sold out. At the time, Lutherwood-CODA had brought to market a new concept in elderly residential services. But Phase III, a $20 million assisted living center serving individuals with daily service and care needs, would be completed in a much more competitive market. Demand for the new facility was lower than it had been for Phases I and II. Moreover, Lutherwood had assumed substantial debt to finance Phase III. All of the equity generated during Phases I and II had been reinvested into Phase III. Kays knew that the organization's ability to service its obligations depended on being able to market and fill the new assisted living facility as quickly as possible. Could Lutherwood-CODA tolerate this new level of financial risk? Would market and economic conditions allow Phase III to execute its aggressive marketing program? Could the project really generate sufficient funds for Lutherwood-CODA's social programs? Was the development and operation of Luther Village consistent with Lutherwood's social mission?

learning objective:

To examine the process of building revenue-generating social enterprises in an established nonprofit and to explore the tensions that can arise between these commercial activities and an organization's mission.

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